Buying a home for the first time is hugely exciting, but it can be a daunting and difficult task for many people. The most important piece of support you need is your mortgage and this is an area that many first-time-buyers need assistance with.
As you’d expect for a purchase of this magnitude, there is a need to be fully prepared when it comes to obtaining a mortgage. The sooner you begin and the more preparation you put in, the easier it should be to obtain a suitable mortgage.
Some of the first steps you should take include:
•Save money – you need a deposit and there are many fees involved
•Ensure you are on the electoral register at your current property
•Check your credit score – if it is poor, repair it, if you don’t have one, take out a credit card and pay it off in full each month
•Obtain documents that show your residential history, your payslips, your P60 documents and information regarding any credit you have
If you are proactive in taking these steps, you’ll find that obtaining a mortgage becomes a simpler process.
Most first time buyers are advised to obtain a mortgage that has been agreed in principle. This sees your lender of choice reviewing your credit history and then confirming, in writing, the sum of money they would be willing to lend you. This shows you have a reliable credit score and it makes you look a serious buyer.
You should then consider the style of mortgage you look to take out, with the two main types being:
•Capital and interest (or repayment) mortgages
•Interest only mortgage
The latter option is becoming less common, so it is likely that the capital and interest mortgage, which behaves like a standard mortgage, will be the option that is open to you.
You will then have to decide between a fixed rate mortgage or a variable rate mortgage, and the variable rate mortgage has a number of different variants.
Fixed rate mortgages allow you to fix the rate and amount of money you pay each month for a set period of time, usually between two and five years. If you have a tight budget and want to know exactly how much you’ll pay each month, this is the mortgage for you.
Variable rate mortgages, as the name suggests, can see you paying different amounts every month, depending on the behaviour of interest rates. It may be that you pay less each month if interest rates fall but if interest rates rise, you could pay more. You need to be confident of your own finances because many people struggle to find the funding to pay more money each month on their mortgage payments.
Knowing that you could pay less each month is an enticement for many people but with variable rate mortgages, your payments can go up or down, so make sure you are confident with any change in the marketplace.
It is best to obtain mortgage advice from someone who is independent and who understands the wide range of products available on the market. Some advisors are tied to certain lenders, which means they only promote certain mortgages or will encourage you to take a certain option.
As soon as you are thinking about getting on the property ladder, you need to focus your finances. This means saving money and it means making your credit score as attractive as possible. When you have these issues at a good level, you can look more seriously at property and mortgage options.
Buying your first home is a challenge but there is plenty of mortgage assistance and advice available for first time buyers.